Ascott Residence Trust - Singapore Exchange · 8/22/2019 · The value of units in Ascott...
Transcript of Ascott Residence Trust - Singapore Exchange · 8/22/2019 · The value of units in Ascott...
Ascott Residence TrustCiti-REITAS-SGX C-Suite Singapore REITS and Sponsors Forum 201922 August 2019
Important Notice
The value of units in Ascott Residence Trust (“Ascott REIT”) (the “Units”) and the income derived from them may fall as well as rise. The Units are not obligations of, deposits in, or guaranteed by Ascott Residence Trust Management Limited, the Manager of Ascott REIT (the “Manager”) or any of its affiliates. An investment in the Units is subject to investment risks, including the possible loss of the principal amount invested. The past performance of Ascott REIT is not necessarily indicative of its future performance.
This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of property rental income, changes in operating expenses, including employee wages, benefits and training, property expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Prospective investors and Unitholders are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of the Manager on future events.
Unitholders of Ascott REIT (the “Unitholders”) have no right to request the Manager to redeem their units in Ascott REIT while the units in Ascott REIT are listed. It is intended that Unitholders may only deal in their Units through trading on Singapore Exchange Securities Trading Limited (the “SGX-ST”). Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.
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Content
Overview of Ascott Residence Trust
Value Creation Strategies
Key Highlights of 2Q 2019
Key Country Updates
Looking Ahead
Appendix
- Proposed Combination with Ascendas Hospitality Trust (as announced on 3 July 2019)
Ascott Orchard Singapore
Overview of AscottResidence Trust
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The United States of America
United Kingdom China
Japan
Vietnam
Malaysia
Singapore
Indonesia
3 properties
4 properties
Belgium
2 properties
Germany
5 properties
Spain
1 property
France
17 properties
7 properties
15 properties
The Philippines
2 properties
4 properties2
Australia
6 properties
2 properties
1 property
5 properties
Ascott Reit – A Leading Global Hospitality REITWell-diversified portfolio of quality hospitality assets located in major gateway cities
S$2.8b1
Market Capitalisation
S$5.5bTotal Assets
>11,700Apartment Units
74Properties
37Cities in 14 Countries
Notes:Figures above as at 30 June 2019 (unless otherwise indicated)1. Based on closing share price of S$1.27 as at 16 August 20192. Including lyf one-north Singapore (currently under development)
Ascott Reit’s Well-Diversified and Resilient Portfolio
Notes:
Above as at 30 June 2019
Geographical diversification
~ 60% : 40%Asia Pacific
Diversified income streams
~40% : 60%Stable
IncomeGrowth Income
Range of product offering include
serviced residences, rental housing and coliving properties
Award-winningpropertiesoperating under established brands
long- and short-stay, business and leisure guests
>50%freehold
Valuable portfolio of properties with
Properties catering to
Europe/US
6
7
56.8%
Singapore 15.8%
Japan 13.0%
China 10.0%
Australia 6.4%
Vietnam 5.4%
Philippines 3.2%
Indonesia 2.0%
Malaysia 1.0%
Asia Pacific 26.5%
France 9.7%
UK 9.5%
Germany 4.7%
Spain 1.3%
Belgium 1.3%
Europe
Total AssetsS$5,494m
16.7%
USA 16.7%
The Americas
Notes:As at 30 June 2019
57% Asia Pacific 43% Europe/Americas
Geographically Diversified Portfolio
14%
25%61%
Gross Profit
S$67.6m1
Management Contracts with MinimumGuaranteed Income
Master Leases
Management Contracts
Freehold
51 to 100 Years
Up to 50 Years
51%
30%
19%
Tenure by Property Value3
>50% Freehold
Notes:1. For the period 2Q 20192. Refers to master leases and management contracts with minimum guaranteed income3. Proportion based on valuation as at 30 June 2019
Resilient Portfolio
S$5.6 million1
• Approx. 40% of gross profit generated from stable income contracts2
• Decline due to re-constitution of portfolio: divestment of Ascott Raffles Place in Singapore (Master Lease) and acquisition of Citadines Connect Sydney Airport (Management Contract)
• Weighted average tenure of stable income contracts of approx. 5 years
Mix of stable and growth income sources targeting both long and short-stay segments…
…with a valuable property portfolio …
…which generated net surplus on revaluation of
Management contracts with minimum guaranteed income
Master leases
Management contracts
Stable Income
Growth Income
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Somerset Heping Shenyang, China
Value Creation Strategies
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Value Creation
• Total assets grew sevenfold since IPO to S$5.5b
• Maiden development project for first coliving property
Notes: Figures as of 30 June 2019
Five pronged approach to deliver value
• RevPAU optimisation & yield management
• Asset Enhancement Initiatives
• Portfolio diversification: geographical spread; product offering; contract types; etc
• Generated S$0.4b net divestment gains and reinvested into higher-yielding assets
• Strong brand recognition and global footprint
• RoFR and pipeline assets
• Alignment of Unitholder interests with ~45% stake
1. Growth
2. Asset Management
3. Unlocking Value
• “BBB” (stable outlook) rating by Fitch Ratings
4. Capital & Risk Management
5. Leveraging Sponsor
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0.8
1.1
1.7 1.7
1.7
2.8
3.0 3.0
3.6 4.1
4.7
4.8 5.55.31
5.5
IPO Mar2006
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 2019
2018Maiden Development Project in Singapore
2015First Property Acquired
in United States
2010First Leap into Europe
2006Started in Pan Asia
Key Milestone Acquisitions since IPO
12 properties
74 properties
1
Criteria for Acquisitions1. Yield Accretive2. Location3. Local Market Conditions4. Value Creation Opportunities5. Building and Facilities Specifications6. Operator’s Capabilities and Track Record
Notes:1. The decrease in total assets was due to the utilisation of the proceeds from the divestment of Citadines Biyun Shanghai and Citadines Gaoxin Xi’an on 5 January 2018 to repay bank loans
Total assets since listing (S$b)
3 July 2019Announced Proposed
Combination with AscendasHospitality Trust
Embarked on Maiden Development Project to Build New Coliving Product
lyf one-north Singapore, located in a prime developing district with limited lodging supply
Notes:1. Subject to change2. Source: JTC (2018)
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Artist’s impression – Communal kitchenArtist’s impression
Coliving a rising trend in today’s
sharing economy amongst the rising millennial-minded business traveller market
lyf one-north Singapore incorporates 324 efficiently designed studio and loft units1 and social spaces
one-north : home to 400 companies, 800 startups and 50,000 professionals2
Attracting over S$7b worth of investments2 and to be developed into a cluster of world class facilities and business parks
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13
• Groundbreaking ceremony was held on 3 June 2019
• Site hoarding completed, main contract awarded and permit to commence work obtained
• Piling works in progress, property on schedule to open in 2021
Development Progress of lyf one-north Singapore1
Notes: Above progress as of July 2019
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Element New York Times Square WestThe United States of America
Asset Enhancement Initiatives2
Criteria for Asset Enhancement Initiatives1. Age of the Property2. Market Outlook3. Yield Accretion
Before After
Somerset Grand Citra Jakarta Indonesia
Enjoy ADR uplift upon completion of Asset Enhancement Initiatives
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Unlocking Value
Total Net Divestment Gains
S$0.4 billion
Accretive Acquisitions
OpportunisticDivestments
Higher YieldQuality Assets
Total Divestment Proceeds
S$1.6 billion
Distribution of Divestment
Gains
Generated …
Criteria for Divestment1. Property Life Cycle2. Market Conditions3. Requirement for additional
capital outlay
3
Notes: Divestment figures above relates to ~10 transactions involving over 30 properties since listing to 30 June 2019
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Capital & Risk Management4
Balance Sheet Hedging
Natural hedging and swaps through foreign borrowings to match capital value of assets on a portfolio basis
Income Hedging
Hedging foreign currencies through forward contracts to protect distribution
Effective Capital Management
Diversified funding sources & proactive interest rate management
‘BBB’ long-term rating by Fitch Ratings with stable outlook and low effective borrowing cost
Strong Balance Sheet
Comfortable target gearing of approximately 40%
Considerations for Hedging
1. Natural Hedge Proportion2. Portfolio Diversification
3. Cost of Hedging4. Need for Certainty
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Stronger Balance Sheet and Active Risk Management
Gearing remained low at
32.8%1
(debt headroom2 of ~S$1.1b)(vs 35.7%)
Low effective borrowing cost3 of
2.1% per annum
(vs 2.1% p.a.)
Interest cover3
5.2X(vs 4.5X)
3.9 years
Weighted average debt to maturity
(vs 3.6 years)
‘BBB’ (stable outlook)
Long-term rating by Fitch
~88%Total debt on fixed rates
(vs ~80%)
NAV Per Unit
S$1.274
(vs S$1.25)
Notes:Figures above as at/for the period ending 30 June 2019, with 31 March 2019 comparable in brackets1. Computation of gearing excludes lease liabilities recognised by virtue of FRS 116 as these operating leases were entered into in the ordinary course of business and were in effect before 1 January 2019 2. Refers to the amount of additional debt before reaching aggregate leverage limit of 45% set by MAS3. Excluding the effect of FRS 116 Leases which was effective 1 January 20194. Adjusted NAV per unit, excluding the distributable income to Unitholders, is S$1.23
Lower gearing and higher interest cover compared to previous quarter
-0.2%Impact of foreign exchange after hedges on gross profit for 1H2019
~48%Total Assets in Foreign
Currency Hedged
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Debt Maturity Profile
0.97% p.a. fixed rate JPY5b MTN
3.52% p.a. fixed rate S$100m MTN,swapped into EUR at fixed interest rate of 1.56% over the same tenure
1.65% p.a. fixed rate JPY7b MTN2.75% p.a. fixed rate EUR80m MTN
Bank loans 1.17% p.a. fixed rate JPY7.3b MTN
4.21% p.a. fixed rate S$200m MTN, swapped into Euros at fixed interest rate of 1.82% p.a. over the same tenure
4.00% p.a. fixed rate S$120m MTN, swapped into EUR at a fixed interest rate of 2.15% p.a. over the same tenure
Diversified Funding Sources Well Spread-out Debt Maturity
183
129
74
166
100
62
87
91
200
123
120
2019 2020 2021 2022 2023 2024 2025 2026 and after
S$’m
16%270
10%174
25%409
3%43
4%67
25%420
1%22
16%274
Notes:As at 30 June 2019
Debt due in 2019 has been refinanced in July 2019Well-diversified funding sources of 53% Bank Loans : 47% MTN
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Strong Sponsor – The Ascott Limited 5
One of the leading international lodging owner-operators
>170Cities
>110,000Serviced residence & hotel unitsIncludes units under development
>700Properties
>30Countries
Notes: Figures updated as at 19 July 2019 and includes A-HTRUST.
>30 year track recordAward-winning brands with
worldwide recognition
Strong alignment of interests –CapitaLand owns ~45% of
Ascott Residence Trust
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Working with Sponsor
OwnerAscott Residence Trust
GuestsSponsor & Operator
The Ascott Limited
to manage the property and provide hospitality services to
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What we do:Invest in serviced residences, rental housing properties and other hospitality assets around the world
Value Creation: Deliver stable and sustainable returns to Unitholders through the ownership and enhancement of the assets
engages service of
What we do:Experienced operator of serviced residence & lodging product
Value Creation: Experience, global presence and economies of scale, suite of brands
Description:A good mix of corporate and leisure guests; varying lengths of stay and preferences
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World Travel Awards 2019Accorded seven accolades, including Europe’s Leading Serviced Apartment Brand for the fourth year running
Asia Pacific Best of the Breeds REITs AwardsTM 2018Best Hospitality REIT (Platinum award)
TripAdvisor Awards 201959 properties1
conferred the Certificate of Excellence Award 2019
Business Traveller Asia-Pacific Awards 2018Best Serviced Residence Brand in Asia Pacific for the 15th consecutive year
Singapore Governance and Transparency Index 2018Ranked 3rd out of 43 Trusts
Awards and Accolades
Belgium's Leading Serviced Apartments 2019: Citadines Sainte-Catherine Brussels
Europe's Leading Serviced Apartment Brand 2019: Citadines Apart'hotel
Germany's Leading Serviced Apartment Brand 2019: Citadines Apart'hotel
Germany's Leading Serviced Apartments 2019: Citadines Arnulfpark Munich
Spain's Leading Serviced Apartments 2019: Citadines Ramblas Barcelona
Highly coveted accolades awarded in past 2 years
Notes: Refer to https://www.the-ascott.com/en/tripadvisor_awards_2019.html for the full list of properties
Citadines Mount Sophia, Singapore
Key Highlights of 2Q 2019
• Higher RevPAU / operating performance from United Kingdom, Belgium, Spain, China, Japan, Vietnam and Singapore
• 18% increase in RevPAU in the Philippines2 due to completion of refurbishment at Ascott Makati
• Excluding FRS 116 adjustments, gross profit decreased 1% mainly due to the divestment of Ascott Raffles Place Singapore. On a same-store basis3, gross profit was higher
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Key Takeaways – 2Q 2019
Completion of …
2%Y-o-Y
Revenue
7%Y-o-Y
Gross Profit
2%Y-o-Y
RevPAU
8%Y-o-Y
DPU
Divestment of Ascott Raffles Place Singapore;
received S$300.3mof balance proceeds
1
Notes:1. Includes FRS 116 adjustments and contribution from (i) Ascott Raffles Place Singapore before it was divested in May 2019 and (ii) acquisition of Citadines Connect Sydney Airport which was completed in
May 2019. 2. In local currency terms3. Excluding FRS 116 adjustments, contribution from Ascott Raffles Place Singapore and Citadines Connect Sydney Airport4. Refers to Asset Enhancement Initiative
Acquisition of Citadines Connect Sydney Airport
AEI4 of Element New York Times Square West & Somerset Grand Citra Jakarta
1
2
3
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Gross Profit (S$m)
Revenue(S$m)
Revenue Per Available Unit (S$)
158 155
2Q 2019 2Q 2018
Unitholders’ Distribution (S$m)
Distribution Per Unit (S cents)
8%Y-o-Y
Y-o-Y2%
67.6 63.1
2Q 2019 2Q 2018
7%Y-o-Y Y-o-Y Y-o-Y
2%
43.1 39.8
2Q 2019 2Q 2018
Financial Highlights(2Q 2019 vs 2Q 2018)
132.5 130.5
2Q 2019 2Q 2018
8%Y-o-Y
Adjusted Distribution Per Unit1
(S cents)
62.5
Excluding FRS 116 adjustments
1%
Notes:1. Excludes one-off realised exchange gains arising from the repayment of foreign currency bank loans
Increase in Unitholders’ distribution due to stronger portfolio performance, lower finance costs and one-off realised exchange gain
1.981.84
2Q 2019 2Q 2018
1.84 1.84
2Q 2019 2Q 2018
Stronger operating performance from properties in key markets
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Revenue(S$m)
Gross Profit (S$m)
Revenue Per Available Unit (S$)
146 142
1H 2019 1H 2018
Unitholders’ Distribution (S$m)
Distribution Per Unit (S cents)
8%Y-o-Y
Y-o-Y2%
122.3 111.8
1H 2019 1H 2018
Y-o-Y3%
74.6 68.9
1H 2019 1H 2018
Financial Highlights(1H 2019 vs 1H 2018)
8%Y-o-Y
Adjusted Distribution Per Unit1
(S cents)
2%Y-o-Y3.43
3.19
1H 2019 1H 2018
3.173.12
1H 2019 1H 2018
112.1
Excluding FRS 116 adjustments
Notes:1. Excludes one-off realised exchange gains arising from the repayment of foreign currency bank loans
248.4 243.3
1H 2019 1H 2018
9%Y-o-Y Y-o-Y
- %
Stronger operating performance from properties in key markets
Increase in Unitholders’ distribution due to stronger portfolio performance, lower finance costs and one-off realised exchange gain
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Revenue (S$‘mil) Gross Profit (S$‘mil) RevPAU (S$)
2Q 2019 2Q 2018%
Change2Q 2019 2Q 2018 % Change 2Q 2019 2Q 2018 % Change
Master Leases1 18.5 20.2 (8) 16.6 18.7 (11) n.a. n.a. n.a.
MCMGI2 21.7 20.0 9 9.8 8.8 11 209 192 9
Management Contracts3 92.3 90.3 2 41.2 35.6 16 149 149 -
o Master Leases: Lower revenue and gross profit due to divestment of Ascott Raffles Place Singapore in May 2019, and lower rent upon renewal of certain master leases in France, mitigated by higher contribution from Germany and Singapore
o MCMGI: Higher revenue and gross profit across Belgium, Spain and UK mainly due to stronger corporate and leisure demand
o Management Contracts: Higher gross profit mainly due to properties in Philippines and Vietnam. Revenue from Philippines was higher due to the refurbished apartments at Ascott Makati, while revenue from Vietnam was higher mainly due to stronger market demand
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Gro
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Inc
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Total
73 Properties4132.5 130.5 2 67.6 63.1 7 158 155 2
Revenue and Gross Profit by Contract Type(2Q 2019 vs 2Q 2018)
Notes:1. Excludes contribution from Infini Garden in 2Q 2018, which was reclassified from Master Lease to Management Contracts after the master lease arrangement expired on 30 June 2018, and includes contribution
from Ascott Raffles Place Singapore before it was divested in May 2019. 2. MGMGI refers to Management Contracts with Minimum Guaranteed Income.3. Includes (i) contribution from Infini Garden in 2Q 2018, which was reclassified from Master Lease to Management Contracts after the master lease arrangement expired on 30 June 2018, (ii) contribution from
Citadines Connect Sydney Airport, which was acquired in May 2019 and (iii) FRS 116 adjustments. 4. Relates to operating properties only and excludes lyf one-north Singapore (under development).
Higher contribution from MCMGIs and Management Contracts
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25%
France 11%
Singapore 6%
Germany 5%
Australia 3%
Master Leases
14%
United Kingdom 10%
Belgium 2%
Spain 2%
MCMGI1
8 Key Markets: Australia (6%), China (9%), France (11%), Japan (12%), Singapore (10%), United Kingdom (10%), United States (20%) and Vietnam (8%) contribute ~86% of Total Gross Profit
39% Stable 61% Growth
61%
United States 20%
Japan 12%
China 9%
Vietnam 8%
Singapore 4%
Australia 3%
Philippines 3%
Indonesia 2%
Malaysia <1%
Management Contracts
Balanced Portfolio of Stable and Growth IncomeNo Concentration in Any Single Market
Management ContractsVariable amount (no fixed
or guaranteed rental)
39 properties mainly in Asia Pacific
MCMGI2
Enjoy minimum guaranteed income
7 properties in Europe
Master LeasesFixed rental1 received
27 properties mainly in Europe
14%
25%61%Gross Profit
S$67.6m
Notes: Above based on 2Q 2019 Gross Profit, excluding lyf one-north Singapore which is under development 1. Rental received under master leases is generally fixed. However, some contracts provide for annual rental revisions pegged to indices and some contracts include a variable rental above fixed rental if certain
conditions are met2. Management Contracts with Minimum Guaranteed Income
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Majority of Key Markets Posted Higher Gross Profit or RevPAU
Gross Profit (LC’mil) RevPAU (LC)
Key Reasonfor Change
2Q2019
2Q2018
% Change2Q
20192Q
2018% Change
Australia (AUD) 1.8 1.7 6 n.a. n.a. n.a. • Lower operation and maintenance expense
France (EUR) 4.9 5.6 (13) n.a. n.a. n.a.• Lower rent upon renewal of master lease and
absence of one-off adjustments
Singapore (SGD)1 3.8 4.6 (17) n.a. n.a. n.a. • Divestment of Ascott Raffles Place Singapore
United Kingdom (GBP) 3.8 3.4 12 144 130 11 • Higher corporate and leisure demand
Australia (AUD)2 2.3 2.5 (8) 120 134 (10)
• Lower RevPAU due to the acquisition of Citadines Connect Sydney Airport, which has a lower ADR, and weaker demand in Melbourne
• On a same-store basis, RevPAU change was -4%
China (RMB) 29.1 25.8 13 455 473 (4)• Lower costs mitigated fall in revenue due to
softer corporate demand in the second-tier cities• FRS 116 adjustments
Japan (JPY)3 661.3 663.6 - 13,238 12,203 8 • Stronger leisure demand offset by higher costs
Singapore (SGD) 2.5 2.5 - 194 190 2• Higher market demand offset by higher
marketing expense
United States (USD) 10.1 6.9 46 240 243 (1) • FRS 116 adjustments
Vietnam (VND)4 93.2 86.8 7 1,583 1,528 4• Stronger market demand and lower operating
costs
Notes: All figures above are stated in local currency1. Includes contribution from Ascott Raffles Place Singapore, before it was divested in May 2019. 2. Includes contribution from Citadines Connect Sydney Airport, which was acquired in May 2019. 3. Includes contribution from Infini Garden in 2Q 2018, which was reclassified from Master Lease to Management Contracts after the master lease arrangement expired on 30 June 2018. RevPAU for Japan refers to serviced residences and
excludes rental housing.4. Gross profit figures for VND are stated in billions. RevPAU figures are stated in thousands.
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Citadines Barbican London, United Kingdom
Key Country Updates
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6.9
2.3
6.3
2.5
120
134
0
20
40
60
80
100
120
140
160
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Revenue ('mil) Gross Profit ('mil) RevPAU
AUD
relates to properties under Management Contracts only
2Q 2019 2Q 2018
As a result of the acquisition of Citadines Connect Sydney Airport, revenuewas higher but RevPAU was lower as the property has a lower ADR. On asame-store basis, revenue and gross profit were lower mainly due to softerleisure and corporate demand in Melbourne, and RevPAU change was -4%
Since the completion of acquisition of Citadines Connect Sydney Airport inMay 2019, efforts were focused on rebranding and building the property’scorporate base and distribution network
IMF forecasted GDP growth of 2.1% for 2019 and a decline inunemployment rate from 5.3% to 4.8% for 20192
Despite the addition of ~7,000 rooms to be completed over the next 4years3, Melbourne is expected to ultimately absorb the supply and return tohistoric levels over the longer term, as the city is a major corporate andleisure market in Australia4
The Australian dollar is forecast to remain low over the medium term,providing support to the growth of international and domestic travel5
Additional revenue from Citadines Connect Sydney Airport offset by softer leisure and corporate demand in Melbourne
Performance Highlights and Market Outlook
AustraliaContributed 6% to Gross Profit1
10% 10%
3 Quest
Properties
Master Lease Management Contracts
Citadines
St Georges
Terrace Perth
Citadines on
Bourke Melbourne
8%
Notes:1. 3 properties under Master Lease contracts contributed to 3% of gross profit, and
3 properties under Management Contracts contributed to 3% of gross profit in 2Q 20192. Source: International Monetary Fund (2019)3. Source: CBRE (2019)4. Source: JLL (2019)5. Source: Deloitte (2019)
Citadines
Connect
Sydney Airport
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ChinaContributed 9% to Gross Profit
64.9
29.1
66.3
25.8
455 473
0
50
100
150
200
250
300
350
400
450
500
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Revenue ('mil) Gross Profit ('mil) RevPAU
RMB
2Q 2019 2Q 2018
Somerset
Xu Hui
Shanghai
Ascott
GuangzhouCitadines
Xinghai
Suzhou
Somerset
Heping
Shenyang
Citadines
Zhuankou
Wuhan
Somerset
Grand
Central
Dalian
Somerset
Olympic Tower
Property
Tianjin
First-tier demand remained resilient; Competition from new supply in second-tier cities
28.0
Excluding FRS 116 adjustments for Somerset Olympic Tower Property Tianjin
2% 13%
Management Contracts
Notes:1. Source: International Monetary Fund (2019)2. Savills Research, Hotels (2019)3. South China Morning Post, Knight Frank (2019)
4% Revenue decreased slightly due to competition arising from an increase
in new supply in the second-tier cities. Demand in first-tier cities remained resilient
Despite lower revenue, gross profit increased 9% (excluding FRS 116 adjustments) due to lower staff costs, marketing expense and depreciation expense
IMF revised its GDP forecast from 6.3% to 6.2% for 2019 and maintained its forecast for unemployment rate at 3.8%1
In the near term, economic uncertainty and ongoing trade tensions may affect business sentiment2
Nonetheless, major initiatives such as the Belt and Road Initiative will bring demand for hotel accommodation. China’s tourism industry continues to grow fast on the back of rising incomes and middle-class consumption3
Performance Highlights and Market Outlook
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1,211.7
661.3
1,159.2
663.6
13,238
12,203
0
2000
4000
6000
8000
10000
12000
14000
-
200.0
400.0
600.0
800.0
1,000.0
1,200.0
Revenue ('mil) Gross Profit ('mil) RevPAU
JPY
2Q 2019 2Q 2018
11 rental housing
properties
in Japan
Citadines ShinjukuTokyo
Citadines Karasuma-Gojo
Kyoto
Somerset
Azabu East
Tokyo
Citadines Central Shinjuku Tokyo
2
Stronger leisure demand
5%1 8%
JapanContributed 12% to Gross Profit
Management Contracts
Notes:1. Including Infini Garden, which was reclassified from Master Lease to Management Contracts after the master lease arrangement expired on 30 June 20182. RevPAU relates to serviced residences and excludes rental housing properties3. Source: International Monetary Fund (2019)4. Source: Colliers (2019)5. Source: JLL (2019)
Revenue increased due to stronger demand for all serviced residences
Gross profit remained relatively stable despite higher revenue, mainly due to higher marketing expense and operation & maintenance expense
IMF forecasted GDP growth of 0.9% for 2019 and unemployment rate remain unchanged at 2.4% for 20193
Japan on track to achieve target of 40 million visitor arrivals by 2020, as it plays host to the 2019 Rugby World Cup and 2020 Tokyo Olympics. The longer term target is to welcome 60 million inbound tourists by 20304
Hotels in Tokyo are expected to benefit from the increase in demand from higher visitor arrivals5
Performance Highlights and Market Outlook
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6.2
2.5
6.1
2.5
194 190
0
50
100
150
200
250
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Revenue ('mil) Gross Profit ('mil) RevPAU
SGD
relates to properties under Management Contracts only
2Q 2019 2Q 2018
Revenue increased 2% due to higher market demand. Gross profitremained stable due to higher revenue, offset by higher marketingexpense
IMF cut its GDP growth forecast from 2.3% to 2.0% for 2019 and maintainedits forecast for unemployment rate at 2.0%2
For the first five months of 2019, international visitor arrivals are on track tomeet the target growth of 1% to 4% for the full year3
Supply is expected to be limited, increasing by 2.0% in 2019, with most ofthe new rooms located in the Sentosa region4
In the shorter term, market RevPAU growth is expected to remain positive,although at a more moderate pace compared to 2018 due to theabsence of one-off events in 20194
Singapore’s hotel market performance will likely continue on its growthtrajectory with rising visitor arrivals, new attractions such as Jewel ChangiAirport, and tight supply in the next few years5
Higher market demand
Performance Highlights and Market Outlook
SingaporeContributed 10% to Gross Profit1
2% 2%
Ascott
Orchard
Singapore
Master Lease
Somerset Liang
Court Property
Singapore
Citadines Mount
Sophia Property
Singapore
Management Contracts
Notes:1. 2 properties under Master Leases (Ascott Raffles Place Singapore, which was divested in May 2019, and Ascott Orchard Singapore) contributed to 6% of gross profit, and 2 properties under
Management Contracts contributed to 4% of gross profit in 2Q 20192. Source: International Monetary Fund (2019) 3. Source: Singapore Tourism Board – International Visitor Arrivals Statistics (2019)4. Source: JLL (2019)5. Source: HVS (2019)
34
8.4
3.8
7.6
3.4
144
130
0
20
40
60
80
100
120
140
160
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Revenue ('mil) Gross Profit ('mil) RevPAU
GBP
2Q 2019 2Q 2018
11% 11%
Citadines
Barbican
London
Citadines South
Kensington
London
Citadines
Trafalgar Square
London
Citadines Holborn-
Covent Garden
London
United KingdomContributed 10% to Gross Profit
Management Contracts with Minimum Guaranteed Income
Higher corporate and leisure demand
Gross profit increased 12% due to higher revenue driven by corporateand leisure demand, with uplift from events such as the RHS ChelseaFlower Show, Royal Ascot and ICC Cricket World Cup
IMF forecasted GDP growth of 1.3% for 2019 and a slight increase inunemployment rate from 4.1% to 4.2% for 20191
The weak GBP continues to support tourism and demand foraccommodation. In 3Q 2019, events such as the Wimbledon and thebiennial Defense and Security Conference are expected to provide anuplift to performance
While uncertainty over Brexit remains, and supply continues to grow inLondon and its surrounding regions at 4%2, the performance of the UKportfolio remains resilient as the properties are under managementcontracts with minimum guaranteed income
Performance Highlights and Market Outlook12%
Notes:1. Source: International Monetary Fund (2019) 2. Source: PWC UK (2019)
35
Notes:1. Source: STR Research (2019)2. Source: International Monetary Fund (2019) 3. Source: HVS (2019)
New York market remains stable
United StatesContributed 20% to Gross Profit
Element New York
Times Square WestSheraton Tribeca
New York Hotel
DoubleTree by
Hilton Hotel
New York
Management Contracts
22.4
10.1
22.8
6.9
240 243
0
50
100
150
200
250
300
0.0
5.0
10.0
15.0
20.0
25.0
Revenue ('mil) Gross Profit('mil)
RevPAU
USD
2Q 2019 2Q 2018
Excluding FRS 116 adjustments for 2Q 2019 and straight-line recognition of operating lease expense for 2Q 2018
2% 1%
7.2
7.4
Revenue (‘mil) Gross Profit (‘mil) RevPAU
In 2Q 2019, New York market RevPAU registered a slight decline of 1.8%,partly due to the absence of a one-off conference which took placelast year1. Coupled with the refurbishment of Element New York TimesSquare West, revenue of the US properties was lower by 2%
Excluding FRS 116 and straight-line adjustments, gross profit decreased3% due to lower revenue and higher staff costs, mitigated by lowermarketing expense
IMF forecasted GDP growth of 2.6% for 2019 and a slight decline inunemployment rate from 3.9% to 3.8% for 20192
Developments within New York which are expected to drive demandinclude the opening of Hudson Yards, the largest private real estateproject in the US, and the expansion of Jacob K. Javits Center, whichwould cater to larger conventions
In the longer term, hotel supply in New York is expected to be limited, ashotel permit applications have slowed and local laws prohibit hoteldevelopment3
Performance Highlights and Market Outlook46%
36
Somerset
Grand Hanoi
Somerset
Chancellor Court
Ho Chi Minh City
Somerset Ho Chi
Minh CitySomerset
Hoa Binh Hanoi
Somerset West
Lake Hanoi
Stronger market demand
VietnamContributed 8% to Gross Profit
Management Contracts
176.3
93.2
168.5
86.8
1,583 1,528
0
200
400
600
800
1000
1200
1400
1600
1800
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
Revenue ('bil) Gross Profit ('bil) RevPAU ('000)
VND
2Q 2019 2Q 2018
7% 4%
Notes:1. Source: International Monetary Fund (2019) 2. Source: Foreign Investment Agency (2019)3. Source: Vietnam Tourism Board – Tourism Statistics (2019)4. Source: Savills (2019)
Gross profit increased 7% due to higher revenue and lower staff costs,partially offset by higher operation & maintenance expense
IMF forecasted GDP growth of 6.5% for 2019 and unemployment rateremain unchanged at 2.2% for 20191
Vietnam continues to attract record foreign direct investment (FDI). Forthe first five months of 2019, FDI commitments hit a 4 year-high ofUS$16.74 billion2
Government initiatives remain supportive of the tourism and hospitalitysectors. For the first six months of 2019, international visitors to Vietnamrose about 7.5% year-on-year3
The operating environment remains competitive, on the back of newsupply and growth in condotels. Key destinations such as Ho Chi MinhCity, due to limited future supply, are expected to maintain goodlevels of stability in performance4
Performance Highlights and Market Outlook5%
Ascott Orchard Singapore
Looking Ahead
38
Tapering Economic GrowthGlobal economy remains delicate as trade tensions continue to weigh on business confidence
Low Interest RatesUS Federal Reserve hints at possiblerate cuts
Flourishing Global Tourism IndustryForecasted to surpass $11 trillion by 2025; International arrivals to exceed 1.8 billion by 20301
Middle class forecasted to increase to 4.9 billion by 2030, fueled by Asia Pacific2
Increase in Lodging SupplyTo meet growing tourism demand
Looking AheadMarket Outlook Resilient Portfolio
Portfolio Diversification & Income Resilience• Global presence and no concentration risk
• ~60% in Asia Pacific where growth remains robust
• ~40% of income contribution from master leases andmanagement contracts with minimum guaranteedincome
Capital & Risk Management• ~88% of total debt on fixed rates, with debt maturity of
3.9 years
• Interest cover ratio of 5.2x
• Maintained “BBB” rating with Stable Outlook by Fitch Ratings; enables Ascott Reit to raise funds at attractive rates and terms
Support of Strong Sponsor• Leveraging The Ascott Limited, one of the leading
international lodging owner-operators
• Pipeline of approximately 20 assets under a right-of-first-refusal arrangement
• Alignment of interests with ~45% stake3 in Ascott Reit
Diversified portfolio, disciplined investment and capital management to deliver stable income for Unitholders
Notes:1. UNWTO2. OECD3. Held through CapitaLand Group
Park Hotel Clarke Quay Singapore
Appendix- Proposed Combination
with Ascendas
Hospitality Trust(as announced on 3 July 2019)
Important NoticeNOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION. THIS PRESENTATION
SHALL NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION, INCLUDING IN THE UNITED STATES OR ELSEWHERE.
This presentation should be read in conjunction with the joint announcement released by Ascott Residence Trust (“Ascott Reit”) and Ascendas Hospitality Trust (“A-HTRUST”) on 3 July 2019 (in relation to the proposed combination of
Ascott Reit and A-HTRUST) (the “Joint Announcement”) as well as the announcement released by Ascott Reit on 3 July 2019 (in relation to the proposed combination of Ascott Reit and A-HTRUST) (“Ascott Reit Manager
Announcement", together with the Joint Announcement, the “Announcements”). A copy of each of the Announcements is available on http://www.sgx.com.
This presentation is for information purposes only and does not have regard to your specific investment objectives, financial situation or your particular needs. Any information in this presentation is not to be construed as investment
or financial advice and does not constitute an invitation, offer or solicitation of any offer to acquire, purchase or subscribe for units in Ascott Reit (“Units”). The value of Units and the income derived from them, if any, may fall or rise.
The Units are not obligations of, deposits in, or guaranteed by, Ascott Residence Trust Management Limited (the “Ascott Reit Manager”), DBS Trustee Limited (as trustee of Ascott Reit) or any of their respective related corporations or
affiliates. An investment in the Units is subject to investment risks, including the possible loss of the principal amount invested.
The past performance of Ascott Reit is not necessarily indicative of the future performance of Ascott Reit.
This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of
a number of risks, uncertainties and assumptions. These forward-looking statements speak only as at the date of this presentation. No assurance can be given that future events will occur, that projections will be achieved, or that
assumptions are correct.
Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected
levels of property rental income, changes in operating expenses (including employee wages, benefits and training costs), property expenses and governmental and public policy changes. You are cautioned not to place undue
reliance on these forward-looking statements, which are based on the Ascott Reit Manager’s current view of future events. None of Ascott Reit, DBS Trustee Limited (as trustee of Ascott Reit), the Ascott Reit Manager and the
financial advisers of the Ascott Reit Manager undertakes any obligation to update publicly or revise any forward-looking statements.
Investors have no right to request the Ascott Reit Manager to redeem or purchase their Units for so long as the Units are listed on Singapore Exchange Securities Trading Limited (the “SGX-ST”). It is intended that holders of Units may
only deal in their Units through trading on the SGX-ST. Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.
The information and opinions contained in this presentation are subject to change without notice.
The directors of the Ascott Reit Manager (including those who may have delegated detailed supervision of this presentation) have taken all reasonable care to ensure that the facts stated and opinions expressed in this
presentation which relate to Ascott Reit and/or the Ascott Reit Manager (excluding information relating to A-HTRUST and/or the A-HTRUST Managers) are fair and accurate and that there are no other material facts not contained in
this presentation, the omission of which would make any statement in this presentation misleading. The directors of the Ascott Reit Manager jointly and severally accept responsibility accordingly.
Where any information has been extracted or reproduced from published or otherwise publicly available sources or obtained from A-HTRUST and/or the A-HTRUST Managers, the sole responsibility of the directors of the Ascott Reit
Manager has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this presentations. The directors of the Ascott Reit
Manager do not accept any responsibility for any information relating to A-HTRUST and/or the A-HTRUST Managers or any opinion expressed by A-HTRUST and/or the A-HTRUST Managers.
For the purposes of this presentation, the following terms have been used interchangeably and to mean the same thing:
“Stapled Units” and “Stapled Securities”; “Unitholders” and “Securityholders”; “Distribution per Unit” and “Distribution per Security”.
Table of Contents
Overview of the Transaction1
Rationale and Benefits of the Proposed Combination2
Unitholders’ Approvals Required3
Indicative Timeline4
Conclusion5
Appendix6
Overview of the TransactionOverview of the Transaction
lyf one-north Singapore(Artist Impression)
Key Highlights
Ascott Reit to acquire all A-HTRUST Stapled Units via a Trust Scheme, with a gross exchange
ratio of 0.836x, based on the respective audited NAV per Unit2 of Ascott Reit and A-HTRUST
Consolidate position as the largest hospitality Trust in Asia Pacific with total assets of S$7.6 billion3
DPU accretion to Unitholders
+2.5%FY 2018 pro forma DPU
Strengthen position for future growth
Stronger financial position for growth to
capture rising hospitality market
Notes: 1. Based on the total assets of Ascendas Hospitality Trust (“A-HTRUST”) as at 31 March 2019.2. Based on A-HTRUST’s audited Net Asset Value (“NAV”) per Stapled Unit as at 31 March 2019 of S$1.02 divided by Ascott Reit’s audited NAV per Unit as at 31 December 2018 of S$1.22. 3. Based on the combined total assets of Ascott Reit and A-HTRUST as at 31 March 2019.
Facilitate inclusion into FTSE EPRA NareitDeveloped Index
Proposed S$1.9 billion1 deal to combine Ascott Residence Trust and Ascendas Hospitality Trust
43
Scheme Consideration
0.7942 new Ascott Reit-BT Stapled Units2 issued at S$1.30
Total Scheme Consideration of S$1.2 billion1 comprises:
By way of illustration, for every 1,000 A-HTRUST Stapled Units, a cash consideration of S$54.30 per Stapled Unit will be paid and consideration units of 794 new Ascott Reit-BT Stapled Units will be issued
The Scheme Consideration is based on a gross exchange ratio of 0.836x,
which is derived from the audited NAV per Stapled Unit of A-HTRUST of S$1.02 as at 31 March 2019 divided by the audited NAV per Unit of Ascott Reit of S$1.22 as at 31 December 2018
Unitholders can continue to receive normal distribution and distribution from net divestment gains until completion of the Combination
S$1.0868
per A-HTRUST Stapled Unit
Permitted Distributions3
Notes: 1. Calculated based on a total of 1,136.7 million A-HTRUST Stapled Units.2. The aggregate Cash Consideration to be paid to each A-HTRUST Stapled Unitholder shall be rounded to the nearest S$0.01. The number of Consideration Units which each A-HTRUST Stapled Unitholder shall be entitled to pursuant to the Trust Scheme shall be rounded down to the nearest whole number, and fractional entitlements shall be disregarded in the calculation of the aggregate Consideration Units to be issued.3. Ascott Reit Permitted Distributions includes, amongst others, the distributions declared, paid or made or to be declared, paid or made in the ordinary course of business and to the extent consistent with past practice for the period from 1 January 2019 up to the day immediately before the effective date, including any clean-up distribution and distribution from net divestment gains.
95% Consideration Units
S$0.0543 in cash2
5% Cash Consideration
44
Combined Entity Structure
Other Stapled Unitholders
Other Stapled Unitholders
59.8%240.2%2
A-HTRUST REIT
A-HTRUST REIT
A-HTRUST BTA-HTRUST BT
Ascott ReitAscott Reit Ascott BTAscott BTStapling Deed
100.0% 100.0%
Notes: 1. Held through CapitaLand group of entities, namely The Ascott Limited, Somerset Capital Pte Ltd, the Ascott Reit Manager and Ascendas Land International Pte Ltd.2. Holdings based on 28 June 2019 and including Consideration Units.
Investment Mandate:
Global mandate for investments in serviced residences, rental housing
and other hospitality assets in any country in the world
CapitaLand1
Ascott Reit to establish a wholly-owned business
trust (“Ascott BT”)Ascott Reit Units will be
stapled with Ascott BT units (together, the “Ascott Reit-
BT Stapled Units”)
A-HTRUST Business Trust (“A-HTRUST BT”) will
become a subtrust of Ascott BT
A-HTRUST REIT will become a subtrust
of Ascott Reit
45
Rationale and Benefitsof the Proposed CombinationRationale and Benefitsof the Proposed Combination
Park Hotel Clarke Quay
Rationale and Benefits of the Proposed Combination
• Potential positive re-rating, wider investor base and higher trading liquidity
• Increase ability to drive growth with stronger financial position and larger debt headroom
1Proxy Hospitality Trust
in Asia Pacific
• Enhance portfolio diversification and resilience• Strengthen presence in Asia Pacific where
business and leisure travel demand remains robust
Enhanced Portfolio2
• 2.5% DPU accretion to Ascott Reit Unitholders1
• Neutral to NAV per Unit2
DPU Accretive to Unitholders
3
Notes: 1. On a FY 2018 pro forma basis.2. As at 31 December 2018, on a pro forma basis, assuming the premium over NAV is written off and transaction costs are excluded.
47
Proxy Hospitality Trust in Asia Pacific1
Total assets of hospitality Trusts in Asia Pacific (S$ bn)
7.6
5.7
4.8 4.4
3.6 3.5
3.0 2.7
2.5 2.2
1.9 1.8 1.5
1.3 1.1 1.0
Asc
ott
Re
it
Re
ga
l Re
it
Jap
an
Ho
tel R
eit
Jin
ma
o H
ote
l an
d J
inm
ao
Ch
ina
Ho
tel I
nv
est
me
nts
an
d M
an
ag
em
en
t
Lan
gh
am
Ho
spita
lity
Inve
stm
en
ts
CD
L H
osp
ita
lity T
rust
s
Far
Ea
st H
osp
ita
lity T
rust
Fra
sers
Ho
spita
lity T
rust
Ho
shin
o R
eso
rts
Re
it
Asc
en
da
s H
osp
ita
lity T
rust
Ea
gle
Ho
spita
lity T
rust
YTL
Ho
spita
lity R
eit
Mo
ri Tr
ust
Ho
tel R
eit
Ne
w C
en
tury
REIT
AR
A U
S H
osp
ita
lity T
rust
Co
mb
ine
d E
ntity
1
8th largest hospitality Trust globally1
Hospitality S-REITs
Ranked Top 10 amongst S-REITs1
Sources: Bloomberg as at 28 June 2019, reflecting only hospitality Trusts with total assets of at least S$1.0 billion. Assuming an exchange rate of S$1 = US$0.739 = HK$5.771 = RMB5.077 = JPY79.61 = RM3.054 = A$1.055 as at 28 June 2019.
Notes: 1. Based on the combined total assets of Ascott Reit and A-HTRUST as at 31 March 2019.
• Consolidate position as the largest hospitality Trust in Asia Pacific
48
Proxy Hospitality Trust in Asia Pacific1
1.6
2.4
1.2
1.62.8
4.0
Ascott Reit Combined Entity
Free float Non-free float
Free float increases by ~50%
Free float and market capitalisation(S$ bn)
Developed:
82%
A-HTRUST EBITDA
Developed: 100%
Ascott ReitEBITDA
Developed: 75%
Combined Entity EBITDA
Emerging25%
Developed75%
Developed100%
Emerging18%
Developed82%
S$1.7bn5
Index inclusion threshold
3 4
Sources: Bloomberg, Company Filings and FTSE Russell. Market data as at 28 June 2019. Assuming an exchange rate of S$1 = US$0.739 as at 28 June 2019.Notes: 1. Based on Ascott Reit’s and A-HTRUST’s financial statements for FY 2018 and FY 2018/2019 respectively.
2. Developed markets based on FTSE EPRA Nareit classification include Australia, Belgium, France, Germany, Japan, Korea, Singapore, Spain, The United Kingdom and The United States of America; emerging markets include China, Indonesia, Malaysia, The Philippines and Vietnam. 3. Based on 2,174.8 million Ascott Reit Units at S$1.30 for each Ascott Reit Unit and a free float of 1,197.0 million Ascott Reit Units.4. Based on 3,086.3 million Ascott Reit-BT Stapled Units (including Consideration Units), at S$1.30 for each Ascott Reit-BT Stapled Unit and a free float of approximately 1,846.6 million Ascott Reit-BT Stapled Units. 5. Based on the threshold of US$1.3 billion in June 2019.
EBITDA1 breakdown by market classification2
• Facilitate inclusion into FTSE EPRA Nareit Developed Index• Potential positive re-rating, wider investor base and higher trading liquidity
49
Proxy Hospitality Trust in Asia Pacific
Greater access to growth opportunities
Increased capacity to undertake more
development/conversion projects
Higher debt headroom,
enhancing financial flexibility to fund future growth
1
~0.8
~1.0
Ascott Reitas at 31 December 2018
Combined Entityas at 31 December 2018
Debt headroom1
(S$ bn)
Notes: 1. Based on an aggregate leverage limit of 45% under the Property Funds Appendix. 2. This is computed based on the financial position of Ascott Reit and A-HTRUST as at 31 December 2018 and 31 March 2019 respectively and assumes that additional S$85.1 million debt was drawn down to fund the cash component of the estimated total transaction costs.
2
Pro forma aggregate leverage of 36.9%represents an available debt headroom of
~S$1.0 billion
• Stronger financial position with increased capacity to drive growth
50
Freehold82%
Leasehold18%
Master Leases
53%
Management Contracts
47%
Enhanced Portfolio2
Australia
Net Property Income Breakdown1
6Freehold
properties
34%of total portfolio
value
Singapore
1Leasehold property
18%of total portfolio
value
South Korea
2Freehold
properties
10%of total portfolio
value
Japan5
Freehold properties
38%of total portfolio
value
Portfolio Valuation Breakdown
Notes: Based on A-HTRUST’s financial statements for FY 2018/2019.1. Excluding contributions from the divested China properties.
51
• Addition of a portfolio comprising 14 quality, predominantly freehold properties in developed markets
Enhanced Portfolio
Notes: 1. Based on Ascott Reit’s and A-HTRUST’s financial statements for FY 2018 and FY 2018/2019 respectively, excluding contributions from the divested China properties. For A-HTRUST, gross profit refers to net property income.
2
Gross Revenue1
(S$ m)
Gross Profit1
(S$ m)
514705
Ascott Reit FY 2018 Combined Entity FY 2018
239
325
Ascott Reit FY 2018 Combined Entity FY 2018
Combined Portfolio
Brands include:
Sheraton DoubleTree by Hilton Element Hotels WBF
Pullman Courtyard by Marriott Park HotelNovotel The Splaisir
Sunroute
Mercure ibis
Sotetsu Grand Fresa
Properties
88Units
>16,000Countries
15Cities
39
Brands
>15
52
• Building a bigger hospitality portfolio
Enhanced Portfolio
Korea1%
China7% USA
8%
Japan18%
Australia18%
Southeast Asia24%
Europe24%
Master Lease36%
MCMGI10%
Management Contracts
54%
Asia Pacific
71%Europe
20%
USA9% Freehold
61%
Leasehold39%
Notes: 1. Breakdown of the combined portfolio valuation of S$6.7 billion, based on the financial position of Ascott Reit and A-HTRUST as at 31 December 2018 and 31 March 2019 respectively.2. Breakdown of the combined gross profit of S$325 million, based on Ascott Reit’s and A-HTRUST’s financial statements for FY 2018 and FY 2018/2019 respectively, excluding contributions from the divested China properties. For A-HTRUST,
gross profit refers to net property income.3. MCMGI refers to Management Contracts with Minimum Guaranteed Income.4. Europe comprises Belgium (1%), France (10%), Germany (5%), Spain (1%), and The United Kingdom (7%); Southeast Asia comprises Indonesia (2%), Malaysia (<1%), The Philippines (2%), Singapore (13%), and Vietnam (7%).
Portfolio valuation breakdown by geography1 Portfolio valuation breakdown by freehold and leasehold1
Gross profit breakdown by contract type2 Gross profit breakdown by geography2
Strengthen presence in Asia PacificStrengthen presence in Asia Pacific Increased freehold componentIncreased freehold component
Balance between stable and growth incomeBalance between stable and growth income Reduced concentration riskReduced concentration risk
Combined Portfolio
+ 8% Freehold
properties
+ 11% Asia Pacific
portfolio
< 20% Exposure
per countryBalancedmix of stable and growth
income
(4)
4
3
53
2
• Enhances portfolio diversification and resilience
Asia Pacific is the fastest growing economic region…
4.2% GDP CAGRfrom 2013 to 20181
Largest share at 38%of global business travel2
…and experiencing a boom in tourism…
5.5% annual growthof international tourist arrivals
from 2018 to 20233
>70%China’s outbound travel
will be within Asia4
Low cost carriers and rail networks
make travel more accessible
…underpinned by an expanding middle-class
66%of global middle-class population
will be represented by Asia5
3.9% disposable income CAGRin Asia Pacific for period 2017 to 2022 (rest of the world 1.6% to 2.3% CAGR)6
Notes: 1. Economist Intelligence Unit. 2. HRM Asia (2018). 3. PATA (2019). 4. Broker research. 5. Organization for Economic Co-operation and Development. 6. EIU market indicators and forecasts, World Travel and Tourism Council.
Enlarged portfolio will serve a broad spectrum of market segments, and is well-positioned to capture the fast-growing hospitality market in Asia Pacific
54
2
• Strengthen presence in Asia Pacific where the demand for business and leisure travel remains robust
Enhanced Portfolio
7.16
7.34
Ascott Reit FY 2018 Combined Entity FY 2018
1.22 1.22
Ascott Reitas at 31 December 2018
Combined Entityas at 31 December 20182
Notes: For illustration only – Not forward looking projections
1. This figure: (a) assumes that additional S$85.1 million debt was drawn down on 1 January 2018 to fund the cash component of the estimated total transaction costs at an effective interest rate of 3.3% per annum; (b) assumes that 100% of A-HTRUST’s distributable income for FY 2018/2019 (including the S$5.1 million A-HTRUST’s distributable income for FY 2018/2019, which A-HTRUST had retained for working capital purposes) was distributed in full; and assumes that the S$5.1 million was funded by the existing cash balances of Ascott Reit; (c) reflects the issuance of: (i) 902.8 million new Ascott Reit-BT Stapled Units issued at an issue price of S$1.30 per Ascott Reit-BT Stapled Unit as Consideration Units; and (ii) 7.7 million new AscottReit-BT Stapled Units issued at an issue price of S$1.22 per Ascott Reit-BT Stapled Unit as the Acquisition Fee on 1 January 2018 (being the closing price of an Ascott Reit Unit on 31 December 2017).
2. This figure refers to the adjusted NAV per Unit assuming write-off of premium over NAV and excluding transaction costs and: (a) assumes that additional S$85.1 million was drawn down on 31 December 2018 to fund the cash component of the estimated total transaction costs at an effective interest rate of 3.3% per annum; (b) reflects the issuance of: (i) 902.8 million new Ascott Reit-BT Stapled Units issued at an issue price of S$1.30 per Ascott Reit-BT Stapled Unit as Consideration Units; and (ii) 8.7 million new Ascott Reit-BT Stapled Units issued at an issue price of S$1.08 per Ascott Reit-BT Stapled Unit as the Acquisition Fee on 31 December 2018 (being the closing price of an Ascott Reit Unit on 31 December 2018). Pro forma NAV per Unit assuming write-off of premium over NAV and including transaction costs is S$1.21.
DPU(Singapore cents)
NAV per Unit(Singapore dollars)
1
55
• 2.5% DPU accretion to Ascott Reit Unitholders, on a FY 2018 pro forma basis• Neutral to NAV per Unit
DPU Accretive to Unitholders3
Unitholders’ Approvals RequiredUnitholders’ Approvals Required
Citadines Connect Sydney Airport
Ascott Reit Unitholders’ Approvals for the Combination
Resolutions Voting MajorityNo.
≥75% votes
To amend Ascott Reit trust deed to incorporate provisions:• to facilitate Ascott Reit stapling scheme;• customary to stapled trusts; and• relating to issue of new units as consideration
1.
≥75% votes; and
50%+1 majority in number
To approve Ascott Reit stapling scheme, including:• the distribution in specie of the units in Ascott BT to the
unitholders of Ascott Reit on a one-for-one basis; and• the entry into of the Ascott Reit stapling deed
2.
50%+1 votes
CL Entities(1) will abstain from votingTo approve A-HTRUST acquisition3.
To approve issue of new Ascott Reit-BT stapled units in consideration of A-HTRUST acquisition
50%+1 votes
CL Entities1 will abstain from voting4.
Note: 1. Refers to The Ascott Limited, Somerset Capital Pte Ltd and the Ascott Reit Manager. 57
A-HTRUST Stapled Unitholders’ Approvals for the Combination
Resolutions Voting MajorityNo.
≥75% votesTo amend A-HTRUST BT trust deed, A-HTRUST REIT trust deed and A-HTRUST Stapling Deed to facilitate the implementation of the A-HTRUST Scheme
1.
≥75% votes; and
50%+1 majority in number
ALI1 will abstain from votingTo approve the A-HTRUST Scheme2.
Note: 1. Refers to Ascendas Land International Pte Ltd. 58
Indicative TimelineIndicative Timeline
ibis Ambassador Seoul Insadong
Indicative Timeline
60
The timeline above is indicative only and subject to change.Notes: 1. The dates of the Court hearings of the application to (a) convene the Trust Scheme Meeting and (b) approve the Trust Scheme will depend on the dates that are allocated by the Court.
2. The Trust Scheme will become effective upon the lodgment of the order of the Trust Scheme Court Order with the MAS or the notification to the MAS of the grant of the Trust Scheme Court Order, as the case may be, which shall be effected within 10 Business Days from the date the last Scheme Condition has been satisfied or waived, as the case may be, in accordance with the terms of the Implementation Agreement.
Expected date of first Court hearing of the
application to convene the Trust Scheme
Meeting1
September 2019
Ascott Reit’s EGM
October 2019
Expected date of Court hearing for Court
approval of Trust Scheme1
November 2019 December 2019
Completion of Combination
3 July 2019
Joint Announcement of Trust Scheme
Expected payment of Cash Consideration and
Consideration Units to Stapled Unitholders
Expected effective date of the
Trust Scheme2A-HTRUST’s EGM
November 2019 December 2019
ConclusionConclusion
Ascott Orchard Singapore
Recap of Transaction Benefits
Proxy hospitality Trust in Asia Pacific
Consolidates position as the largest hospitality Trust in Asia Pacific with total assets of S$7.6 bn1
Facilitate Index inclusion
with potential positive re-rating and wider investor base
Portfolio enhancement
Addition of 14 quality and predominantly freehold properties, enhancing portfolio diversification and resilience
DPU accretion to Unitholders
+2.5%FY 2018 pro forma DPU
Increased flexibility to drive future growth
Strong financial position for growth and to
capture rising hospitality market
Notes: (1) Based on the combined assets of Ascott Reit and A-HTRUST as at 31 March 2019.
AppendixAppendix
The Splaisir Seoul Dongdaemun
A-HTRUST Portfolio Overview
64Source: Company filings.Notes: 1. Valuation as at 31 March 2019.
Overview of Properties
NamePullman Sydney
Hyde ParkNovotel Sydney
CentralNovotel Sydney
Parramatta
Courtyard by Marriott Sydney –
North Ryde
Pullman and Mercure
Melbourne Albert Park
Pullman and Mercure Brisbane
King George Square
Hotel Sunroute Ariake
Location Sydney, Australia Sydney, Australia Sydney, Australia Sydney, AustraliaMelbourne,
AustraliaBrisbane, Australia Tokyo, Japan
Land Title Freehold Freehold Freehold Freehold Freehold Freehold Freehold
No. of Rooms 241 255 194 196 378 438 912
Valuation1
(S$ m)156.4 161.2 43.7 52.3 109.4 89.2 325.0
Overview of Properties
NameSotetsu
Grand FresaOsaka-Namba(2)
Hotel WBF Kitasemba West
Hotel WBF Kitasemba East
Hotel WBF Honmachi
Park Hotel Clarke Quay
The Splaisir Seoul Dongdaemun
ibis Ambassador Seoul Insadong
Location Osaka, Japan Osaka, Japan Osaka, Japan Osaka, Japan Singapore Seoul, Korea Seoul, Korea
Land Title Freehold Freehold Freehold FreeholdLeasehold,
expiring November 2105
Freehold Freehold
No. of Rooms 698 168 168 182 336 215 363
Valuation1
(S$ m)239.8 43.2 43.1 43.3 325.0 93.8 96.9
A-HTRUST Portfolio Overview
65Source: Company filings.Notes: 1. Valuation as at 31 March 2019.
2. Formerly known as Hotel Sunroute Osaka Namba.
Thank you